Today, financial transactions such as credit card transactions, are performed either in person or over a communication link like a telephone. In the case of credit card or debit cards, the merchant receives a card number and an expiration date for the card and contacts a bank, credit card company or other financial institution to confirm the information of the card to verify its authenticity.
Merchants often use a VeriFone system (of Redwood City, Calif.) to obtain confirmation. The VeriFone system allows a merchant to automatically enter the necessary credit card information by swiping the card through a reader that reads the information from a magnetic strip on the card. Once read, the VeriFone system places a phone call to contact the institution to confirm the information. To merchants, the VeriFone system is very easy to use.
When the card holder is not present and wishes to make a credit card transaction, that individual typically contacts the merchant by telephone or by mail. Where time is a consideration, an individual will typically place a credit card order by phone. When making a credit card order by phone (or some other telecommunications medium), security becomes an issue because information is being sent on ordinary communications lines, which are typically not secure channels. Some unscrupulous individuals may intercept credit card information while it is being sent over the communication medium or even while at the merchant's place of business. What is needed is a way to perform secure credit card transactions using an insecure, communications medium.
Facsimile communication is a well-known communications technique. A facsimile transaction is generally not secure. A document may be encrypted prior to being sent to add security. However, the encryption scheme must be known by both the customer and the merchant so that the merchant is able to obtain the customer's information. For using such a system, the merchant and the customer may have to be very familiar with encryption technology, which is not the case. Also, ensuring that a merchant is able to decrypt a customer's document may require the customer and the merchant to have contact prior to placing an order. This prior contact may not be possible nor convenient. Furthermore, a merchant could not practically maintain a large number of different encryption schemes of various customers. However, if only a small number of encryption schemes are used, security may by compromised. Thus, in the prior art, the use of encryption with facsimile transactions has some drawbacks. It would be desirable to utilize a communication medium, such as facsimile communications, without requiring prior contact between a customer and a merchant, and with ease of use for both the customer and the merchant.
Changes could be made to communication systems to make them more secure. However, these changes usually require added costs and some downtime to the system to implement the changes. It would be advantageous to use existing communications hardware that does not have to be modified and is already in place.
The present invention provides for secure financial transactions. The present invention is easy to use for both the customer and the merchant and employs a system of existing telecommunications technology that does not have to be modified.